Buy Karur Vysya Bank, target price Rs 300: ICICI Securities

ICICI Securities has a buy call on Karur Vysya Bank Ltd. with a target price of Rs 300.0. The current market price of Karur Vysya Bank Ltd. is Rs 209.65 . Karur Vysya Bank, incorporated in 1916, is a bank with a market cap of Rs 17232.95 ccore.

Karur Vysya Bank's key products/revenue segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Standalone Total Income of Rs 2953.44 crore, up 3.41% from last quarter Total Income of Rs 2856.01 crore and up 18.27% from last year same quarter Total Income of Rs 2497.17 crore. The bank has reported net profit after tax of Rs 496.03 crore in the latest quarter.

Investment Rationale
In the current cycle, Karur Vysya Bank has built strong resilience in growth (strong edge on cost of funds; diversified book), opex (front-loaded investments in manpower, tech) and asset quality (one of the few banks to see improving credit costs), and thus, RoA longevity. ICICI Securities highlights healthy option value once the deposits/unsecured PL environment improves. They expect Karur Vysya Bank to retain its leadership on RoA/RoE among mid-smaller private banks. The brokerage maintains a BUY with an unchanged target price of Rs 300, valuing the stock at ~1.8x FY26E (implied target of ~1.6x FY27E) ABV and ~12x EPS. The target multiple is reflective of strong resilience in growth, opex and RoA. Key risk is slower-than expected deposits mobilisation impacting growth.

Promoter/FII Holdings
Promoters held 2.13 per cent stake in the company as of 30-Jun-2023, while FIIs owned 14.79 per cent, DIIs 38.44 per cent.